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Global markets: In top gear

Nov 1, 2003

Big merger deals, good economic reports and some positive results have driven sentiments on the US bourses this week. Resultantly, for the week ending October 31, the NASDAQ and the Dow were up by 4% and 2% respectively.The markets in the US opened this week on a high note on the back of merger deals in excess of US$ 65 bn (Bank of America acquiring FleetBoston and R J Reynolds Tobacco Holdings deciding to buy BAT's US business). Also, various economic reports indicating a revival of the US economy improved sentiments and gave a further thrust to the markets. Higher than expected GDP growth numbers (7.2% annualised for the third quarter), 3.6% rise in the sale of owned houses and a 0.8% rise in durable goods order in September '03, were the key highlights of the various reports released during the week. Meanwhile, in its policy meeting, the Fed has decided to maintain its federal fund rates at 1%. The above factors ensured that the Dow and Nasdaq made steady gains throughout the week.

Indices24-Oct-0331-Oct-03Change
Dax 3,453 3,656 5.9%
Hang Seng 11,736 12,190 3.9%
NASDAQ 1,866 1,932 3.6%
BSE-Sensex 4,757 4,907 3.1%
Dow 9,582 9,801 2.3%
Nikkei 10,336 10,560 2.2%
FTSE 4,239 4,288 1.1%

US economic revival indicators had a spill over effect on global markets, with all major indices making gains during the week. Dax (Germany) led the pack with a strong 6% gain. Among Asian indices, while the Hang Seng (Hong Kong) gained by 4%, the Nikkei was up by 2%. It is to be noted that increased foreign fund inflows have had a major impact on the improving sentiment in the Asian markets. However, with the US economy (finally!) showing some signs of improvement, all eyes are set on the movement in US interest rates.

(Price in US$)24-Oct-0331-Oct-03Change
HDFC Bank**23.825.98.7%
Satyam16.718.18.7%
Wipro33.636.38.2%
ICICI Bank11.812.77.4%
Infosys79.084.57.0%
Dr.Reddy's25.426.75.0%
Rediff6.56.62.0%
Silverline1.01.0-5.0%
Satyam Infoway6.76.0-10.3%
MTNLNA4.8-
VSNLNA5.4-

Prices of Indian ADRs were significantly influenced by improved performance reported by these companies in their September quarter results. Dr Reddy's reported an 11% growth in topline and a 5% rise in bottomline. ICICI Bank, on the other hand, reported a 41% growth in its bottomline despite a 4% drop in income from operations. ICICI Bank (7%) and Dr Reddy's (5%) were among the top gainers for the week. However, VSNL, which has reported dismal quarterly performance, was among the biggest losers for the week. Software stocks had a good week, with Satyam (9%), Wipro (8%) and Infosys (7%) all ending the week in the positive territory.

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